ISLAMABAD: The Commerce Division has proposed rationalisation of 515 tariff lines — mostly raw materials — in the upcoming budget.

The revenue impact of the duty reduction on these items are estimated at Rs15 billion per annum.

The government will announce budget on April 27. The spokesperson for the division, Muhammad Ashraf, said the budget proposal was made public to get a wider feedback from all stakeholders.

In 2015, the PML-N government for the first time in the country’s history imposed 1 per cent customs duty on raw materials which was then increased to 3pc in the next two years. There are certain raw materials which also attract approximately a 20pc duty.

As per the proposed plan, the Commerce Division has suggested to reduce customs duty to 16pc from 20pc on 200 tariff lines, 11pc from 16pc on 32 tariff lines, 8pc from 11pc on 49 tariff lines, 5pc from 11pc on 28 tariff lines and 3pc from 11pc on four tariff lines.

It was recommended to bring down duty to zero per cent from 3pc on 151 tariff lines and remove regulatory duty on 51 tariff lines where anti-dumping duty has been imposed.

Ashraf said that all these tariff lines were identified after due consultation with all stakeholders. The Commerce Division has initiated a plan to bring down duties on import goods especially those falling under the free trade agreement with China.

Federal Bureau of Revenue and Board of Investment have already opposed the political move of the ministry on the grounds that unilateral liberalisation will not only deprive the country from revenue collection, but will also discourage the proposed move to facilitate Chinese manufacturers to relocate their industries to Pakistan under special economic zones.

The Commerce Division is currently working on the formulation of Strategic Trade Policy Framework 2018-23 in consultation with the stakeholders.

The Commerce Division and National Tariff Commission (NTC) have undertaken an exercise to identify the inputs/raw materials of the export-oriented products and their tariff structure. The objective is to rationalise the tariffs in order to make exports more competitive and facilitate participation of local manufacturers, including small and medium enterprises, in global and regional value chains.

The proposed policy improve the competitiveness of the leading export sectors including textiles, apparel, leather, spices, chemical products, plastics and articles thereof, iron and steel.

Both the division and NTC have identified tariff lines which are being considered for revision in the Budget 2018-19 to bring positive improvement in the tariff structure.

While a comprehensive tariff policy for industrial expansion including the medium and long-term measures is being developed, in the short-term immediate rationalisation is being considered on 515 tariff lines.

Published in Dawn, March 23rd, 2018